United States

Report | Economic insight for August 16, 2017

Summary

​Inflation data for July failed to support the case for another rate hike. And unless faster wage growth can eventually translate into stronger spending and price increases, we don't expect a third rate hike in 2017 to occur. While one more rate increase of 25 basis points would mean little for commercial real estate (CRE), there is a bigger question concerning inflation and CRE. One of the key benefits of owning CRE is that it serves as a partial inflation hedge. In a low inflation world, that benefit is somewhat diminished. But CRE still provides investors with diversity and attractive current income. This assumes that the debt ceiling is raised in a timely manner and we avoid economic chaos this fall. But last week's heated rhetoric between the U.S. and North Korea threw a wrench into the mix, roiling financial markets in a way we haven't seen for months.